Do Women Make Better Investors?

I have a feeling I might annoy the male-dominated personal finance blogosphere with this one, but I think that in general, women tend to make better investors (though I would say that the owners of this blog are an exception because they are big fans of ETFs – exchange traded funds – and there is very little speculation with these). They also focus on cutting costs to the bone by investing through their Questrade account instead of trying to beat the market at a big-name bank where trades are much more expensive – but enough about them!

The other day I was going out for dinner with my boyfriends male friends. One of his friends does day trading or trading at home for his job. The conversation inevitably turned into investing, as it always seems to do when you get a bunch of guys together. They were talking about REITs (Real Estate Investment Trusts) and other hot stock tips. In the past, I would get excited about this and take mental notes about where to invest my money in next.

As the years have gone by I have learned my lesson in investing to not listen to “hot stock tips” especially at the water cooler or from a bunch of guys (buying Sun Life, Luxottica, penny stocks, Gold, Silver, and listening to Jim Cramer on television etc. later). Now, I am more careful, am more risk averse, and have learned that ETFs and dividend paying stocks are well, much more stress free and gratifying.

Do Women Make Better Investors?

According to US News, women make better investors than men because we are less competitive than men, we take less risks, we do more homework on equities and funds that we plan to invest in, and we realize (which I think is probably the most important thing) that we are not in control- that Mr. Market is in control. In fact, in a report done in 2012, women hedge fund managers outperformed male hedge fund managers by 6 percentage points over a 9 month period in 2012.

It is the testosterone that drives the thrill seeking behaviour, the risk and the adrenaline rush for more adventure in the roller coaster ride they call the stock market. Another reason, MSN Money says why women make better investors than men is because women are more objective, seeking the facts and making their analysis before taking action. Men on the other hand, are more spontaneous, more emotion driven when they make their stock buying and selling decisions. In addition, men are less likely to admit mistakes and are apt to hold on to a nose-diving investment longer before cutting their losses.

The Facts Say Women Make Better Investors…But

I do agree that on the whole, women can make better investors, but I find that a lot of women (a lot of women I know, anyway) are a bit too risk-averse. They have their money socked away in GIC's and high interest savings accounts at their preferred online bank (better interest rates and more convenient), when they could be investing it in some index funds instead. I have spoken to a few of my friends, offering to help set them up with a TD e series account or an even more simple robo advisor account at Wealthsimple, but they have declined for now, worrying about the risk of indexing and the stock market. Which is a valid concern, of course, but considering that GIC's and high interest savings accounts only give you a marginal rate of return that is less than the costs of inflation, it might be a better idea to add a little risk in to gain more return.

In summary, I think that women can make better investors but they need to put their foot in and dip it into the pool rather than sit on the sidelines and watch people have fun in the pool. You can have fun in the pool if you don't know how to swim, just hang out in the shallow end first. Weird analogy I know, I just thought of it now.

Also, women interested in getting started with investing should read Smart Women Finish Rich by David Bach. I find that financial books all say the same thing but they do give you the inspiration to take that first dip into the pool.

Lets face it, women are just superior to men. ‘Nuff said.

I'm kidding! 🙂 Don't worry, I am not that feminist 😉 Though financially independent women are a turn on, right?

Young is a writer and former owner of Young and Thrifty and the main "twitter' behind Young and Thrifty's twitter account. She lives in Vancouver, BC and enjoys long walks on the beach, spending time with her anxious dog, and finding good deals. If you like what you read, consider signing up for email updates.

9 Comments

Philon April 29, 2014 at 8:02 am

I hear what your saying and have read much data that supports what your saying, but I will say no. Life experiences and education with whatever you are investing in is what drives investing success. If you have a propensity toward the medical field, investing your time in this area can pay great dividends in life, or perhaps you are a great visualizer who likes to socialize perhaps real estate in more up your alley. Again, whatever you are investing, time or money, luck may have something to do with a small percentage of cases, but the bulk of life’s successes are from a build up over time of investments, of which arguably male, female, or or some percentage there of (there are transgender out there, don’t forget…) should make no difference. For my personal example, my wife is great at accumulating dollars from her job, but lacks on the side of how to have it grow once she’s got it. would I call her a better investor, probably, as she does make more than I, currently. I on the other hand do not work and as such manipulate here parked money… So am I a better investor? Yes when compared to her money sitting in a bank account, but as yet not to making as much as she is bringing in with her job by me investing what she has accumulated. It’s all about perspective. invest in what you do best for the best long-term return in life – Cheers.

@Phil- I totally agree with you here 🙂 A lot of my girlfriends don’t invest in the stock market, but they do know how to save! I’d say of about 8 girlfriends I have, only about 1 invests directly in the stock market.

Philon May 1, 2014 at 10:00 am

So to your topics related to dating, you seem more to my mind set than my wife’s, which means you should try and find someone to date that first off sets off butterflies in your stomach, because that’s what true love is all about – my wife IS my best friend… once you wade through that field you want to make sure they are compatible with your money thoughts. Please note not opposite, and not the same… compatible. opposites who attract rarely work out in the long run… So my thought for you is to find someone who has a good head on their shoulders, but might not have the investment savvy you have, in which case you will compliment them and can help them grow as a person. This goes for most attributes… So to summarize, relationships flourish when there are complementary differences in personalities and life skills, so look for people who might complement your weaknesses and enjoy a happy life working together to solve life’s mysteries – cheers.

I totally agree with this one, I have read in some blogs that women are really making a better investment rather than man. But in some point, it depends how educated woman are and their solid background of experiences.

“Though financially independent women are a turn on, right?”
Yeah they are!
Andrew Hallam also had a chapter in his book “Millionaire Teacher” that addressed this and had some good points. I am amongst the stubborn men myself so no, boys rule and girls drool. Kidding! I do agree. You win girls.

I think if you compare yourself to a group of guys who trade ‘hot stock tips’ (not the sharpest knives in the drawer) then you will inevtitably look better. Also there have been a lot of months before, and after ‘a 9 month period in 2012’ which it would be worthile looking into before concluding that women are better investors.

Do you think it’d be fair to say there are more guys that follow “hot stock tips” than women Adam? In my experience men want to swing for the fences far more often then solid production at each at bat.

You are eligible for $100 in Free Trades if you sign up with discount brokerage Virtual Brokers through our link (or use coupon code YNGTHRFY17). To learn more have a look at our Virtual Brokers review 2018.
Exclusive Offer

You are eligible for $15,000 managed for free for one year with BMO Smartfolio. Use through our referral link (or use promo code YTSF). To learn more about the first bank robo advisor go here - BMO Smartfolio Review.
Exclusive Offer